Character Matters

Character Matters

Core Values

I have often written about the importance of a company’s Core Purpose and its Core Values. The organization’s Core Purpose is why it exists and gives everyone an understanding of what it does. The company’s Core Values explain how the company expects its employees to behave. The purpose of these is to align behavior across the organization and thus produce better results. In many cases, the Core Values are short and need corporate folklore around them to provide context. However, given the organization’s Core Purpose and Core Values, most people should determine how to respond to a situation that works in the organization’s best interests.

As Jim Collins says, you would take a hit to profits to ensure you live up to your Core Values. Thus, there are no outs from Core Values. That is the way the organization behaves, and there are no exceptions. Because of this strictness, I genuinely believe that Core Values need to be framed by folklore and corporate history to give them context. Humans relate to stories, so stories of why these values are essential and how we should interpret them will enable your employees to understand and adopt them quicker.

Instilling Core Values into the Organization

When recruiting employees, it is useful to look at their prior employer. If the organization they worked for before had very different Core Values, they are unlikely to fit within your organization and add value. For example, if their prior employer was Stratton Oakmont and one of your Core Values is to treat customers with respect, they are probably not worth interviewing. Most recently, Forbes has published a piece, “A Truth Reckoning: Why We’re Holding Those Who Lied for Trump Accountable,” where they argue that those who lied should not be hired, and if any company does hire them, Forbes will assume everything the company talks about is a lie. It will verify everything they say on the assumption it is a lie.

How someone behaves tells you and their subordinates what matters to them and what you expect from them. We all have baggage, and in the wonderful world of LinkedIn, Glassdoor, and general industry incestuousness, it is easy to find someone’s prior behavior with a little digging. Thus, I find it interesting when I hear someone say with shock, “I never expected them to behave this way,” and it is a behavior pattern the person has always exhibited.

There many ways of setting up situations to observe the potential employee’s true colors. We know how Zappos! checked candidates for behavior from how they treat the “driver” who picked them up from the airport. Other companies have, pre-COVID, taken candidates to lunch and had the wait staff bring them the wrong order to see how they dealt with it.

The most important thing for the organization is to ensure that its employees live its Core Values daily. The challenge for many organizations is how to instill Core Values into employees and reinforce them. Below are examples of how companies achieve this.

  • One organization has new employees spend their first week solely focused on learning and understanding its core values from its folklore through discussions with many of their colleagues. At the end of the week, the new employee meets with the CEO and discusses the company’s Core Values, and the CEO seeks to ensure that they genuinely understand the Core Values and what is expected of them; if not, they are let go. The CEO’s justification for having employees do nothing else during that first week is that it is the best time to learn and absorb the Core Values. As Core Values guide their behavior, the longer an employee takes to understand them, the greater the chance that they behave in ways that are contradictory to the Core Values. Such action could potentially damage the company’s relations with customers or suppliers and damage the employee’s relationship with their coworkers.
  • Cambridge Air Solutions provides all new employees with a vest to identify them as such, and all employees are responsible for helping the new employee learn the Core Values. Because new employees are easily recognized during their onboarding process, they receive encouragement and support from other employees. Those employees are then more willing to help other new employees who come after them. Thus, the process reinforces itself and ensures that desired behaviors become ingrained.

Living Core Values

However, regardless of your onboarding process, the CEO, management team, and employees need to continually focus on living the organization’s Core Values and make them Actions to Live By. Many organizations have different ways of doing this. Some are like ReStockIt, which has an icon for each Core Value. Employees can award any other employee an icon for following exhibiting a Core Value. This behavior reinforces living Core Values among the employees. Others allow employees to call each other out for not displaying a Core Value in a situation. In my work, I have found it interesting that CEOs, when facing a dilemma, rarely frame it within their Core Values to see how they should proceed. Doing that often provides an easy answer to the problem.

The iconic investment bank, Goldman Sachs, has had its reputation a little tarnished over the last decade or so for defrauding clients in the Global Financial Crisis and more recently the IMDB scandal. Thus, I have often wondered if I am Goldman’s client, what is more important to Goldman, me or them. Well, obviously it is Goldman, as has been recently demonstrated with WeWork, where they were a lead underwriter of a worthless company. More recently Goldman’s CEO, David Solomon, expressed concern about market euphoria driven by small investors buying IPOs. While expressing concern, Goldman is taking Robinhood public, which gamifies stock investing and is damaging to its supposed clients, resulting in financial loss and suicide. I use “supposed” because as with all things that are free, the client is not the client but the product. Obviously making money is Goldman’s Core Value, and whether or not it is damaging to anyone else is irrelevant.

In discussing Core Values, I often ask, “What are the top five things, non-criminal, that would get you fired in this organization?” The answers to this question are the opposite of your Core Values. If you have a Core Value of “Treat everyone with respect,” and none of the answers says you would be fired for disrespecting someone, then that is not a Core Value. Regularly doing this exercise is eye-opening for many CEOs. While companies have Core Values and post them everywhere, they just become words rather than actions to live by.

From the Top Down

While corporate Core Values are essential, the organization’s behavior is purely a summation of the individual leaders’ Core Values. Thus, it is the behavior of the business leader or CEO that is key. I remember sitting in a meeting with the late Robert Maxwell, where his solicitor acknowledged the contents of an off the record conversation with our solicitor. Maxwell turned to his solicitor and said, “You will unsay whatever it is you said.” That statement told you everything you need to know about Maxwell’s Core Values, and thus it was no surprise that a year or so later, we learned that Maxwell had stolen his company’s pension funds.

In my career, I have left companies because of behaviors I saw that didn’t fit with my Core Values. Seeing a CEO verbally abuse a janitor or someone at a low level who had no responsibility for the situation told me enough about their character. Reflecting on those decisions now, I realize that I would have made a lot more money staying, but at what cost to my values. For me, the price was always too high. As I have mentioned before, from what I saw of Robert Maxwell, I could never have worked for the Mirror Group or any of his other organizations.

If someone starts to behave against your Core Values, as, with any abusive relationship, my advice is to run, don’t walk. They are unlikely to change, and the internal stress you will face from working in such an environment will take a terrible toll on your body. An ex-colleague of mine collapsed and was sick for a week after a business trip with an abusive boss.

Furthermore, if you have someone in your organization that is abusive in some fashion, those that can leave will. Those who don’t, have no alternatives or know that they are overpaid and stay for the money. Neither is good for the long-run health of the firm.

Tolerating Bad Behavior

However, too often, I hear business leaders making excuses for a member of a team who does not live their Core Values, saying, “They are too important” or “They are our top salesperson.” While this may be true, giving someone a pass weakens the Values’ importance and tells everyone that they are unimportant. 

It is recognized that the main reason top employees leave an organization is that management tolerates mediocre talent. If the Core Values are Core Values, then accepting someone who doesn’t live then is tolerating mediocre talent, and you will lose your best employees who do believe in your Core Values.

If you are willing to tolerate a top salesperson breaching your Core Values, the message that you are sending to your organization is, “Money is our Core Value.” As a result, you can expect everyone in the company to undertake whatever is necessary to make money, regardless of what your “Core Values.” No, please understand me, if money is your driver, I don’t believe that is wrong; it is what it is. However, once you have decided that money is your driving value, it is hard to claim you have others. The reason is that with Profit/Money as a Core Value, it will override any value because that is what is valued. If your Core Value is respect, but if I disrespect an employee to get a large order, respect can never rise above money. Also, I have noticed that those companies for which money or profit is the driving value always have little employee commitment because it attracts employees who believe the same thing. They will always leave for more money. Finally, most companies and people with money as their Core Values don’t have great endings, and we only have to look at Enron, WorldCom, Bernie Madoff, and Bear Stearns for examples.

Working with Others

However, living your core values must cover all your actions. If you have a customer that is poorly treating an employee and your Core Value is respect, you need to either get the customer to change or terminate the relationship. Again, Core Values are things we would protect over profit and while losing a customer is never easy, the message of doing so would do wonders for your team. A client of mine had a client who was abusing one of their managers to the point that the manager told his CEO that he would resign because he could no longer take it. The CEO raised the issue with me, and I pointed to one of his Core Values, which was, “A supportive environment to help all employees be their best.” It wasn’t hard to see what the decision needed to be. As in most cases, when my client contacted the client’s CEO to tell him that they were terminating the relationship, their client insisted they stay and terminated their bad behaving employee.

However, with Core Values, it is not just your employees, customers, and suppliers. Today many millennials are interested in what you represent, and they are looking at the whole picture. Thus, many are caught in a difficult situation for not doing enough due diligence or, when things go wrong, are thrown to the wolves. Many people get caught up on the wrong side of an issue because they didn’t think it through. Les Wexner sought to distance himself from Jeffery Epstein as fast as possible by claiming theft. Wexner’s saving grace was that Epstein took his own life. Still, if one looks at their relationship, it began in the 1980s. While there was an effort to distance from Epstein eighteen months after his charges in 2006, in 2019, Wexner stated that Epstein had been misappropriating funds from the Wexner Foundation. It would appear that money was Wexner’s motivation, and so he overlooked Epstein’s character. Unfortunately, this seems to be his MO as his property appears to be part of the Ohio State wrestling sex abuse scandal. 

Roger Ailes’ sexual harassment at Fox News shone a light on that organization’s values, which openly accepted sexual harassment. Although initially denied, accusations against Ed Henry, Tucker Carlson, and Sean Hannity of sexual harassment and disclosure that Fox News had paid tens of millions to settle six such claims against Bill O’Reilly were evident sexual harassment was happily tolerated at Fox News. In O’Reilly’s case, sixty companies withdrew their advertising when news of the settlements became known, causing the company to terminate his show. While Ailes and O’Reilly left Fox News, Ailes continued to advise the Murdochs until his death. Given the Murdoch’s acceptance of his values, he revealed his own, so it is apparent why sexual harassment was such an issue at Fox. As younger consumers accept BLM and the #MeToo movement, companies and their executives will have to ensure they live their Core Values.

Finally, we might see a backlash against companies using NDA and settlements to shut down any knowledge of breaches lousy behavior. In my opinion, that alone confirms that the organization doesn’t adhere to any Core Values that it would like publicized.

Time to Take a Stand

The last 13 months have been a test for many with COVID, BLM, MeToo, and the attack on the Capital last week. What has saddened me the most is how few CEOs have stood up and taken a stand. I have always accepted that politicians are not brave and follow the crowd, but with CEOs and their cry for authority at the highest levels, they cannot be silent. While CEOs are risk-averse and would argue that they want to put their heads above the parapet as they have to protect their business, the counter-argument is if you’re going to lead, lead, and do it by example. You want the “big bucks” and prestige of being a CEO, well, with all that glory and reward, there is a price, and you don’t get to claim ignorance. 

I have repeatedly said that how you have acted in the last twelve months will define your career for the next decade. Many are finding that lesson harrowing today. Cognitive dissonance and justifying away all the breaches of your supposed Core Values for profit or business relations has shown everyone what is essential, rather than what you claim. 

While it is easy for me to judge, many argue that these things are on a spectrum and are not so cut and dry. I would point you to Clayton Christiansen’s great Harvard Business Review article, How Will You Measure Your Life, where he addresses Avoiding the Marginal Cost Mistake. 

“We’re taught in finance and economics that in evaluating alternative investments, we should ignore sunk and fixed costs, and instead base decisions on the marginal costs and marginal revenues that each alternative entails. … If we knew the future would be exactly the same as the past, that approach would be fine. But if the future’s different—and it almost always is—then it’s the wrong thing to do.

This theory addresses the third question I discuss with my students—how to live a life of integrity (stay out of jail). Unconsciously, we often employ the marginal cost doctrine in our personal lives when we choose between right and wrong. A voice in our head says, “Look, I know that as a general rule, most people shouldn’t do this. But in this particular extenuating circumstance, just this once, it’s OK.” The marginal cost of doing something wrong “just this once” always seems alluringly low. It suckers you in, and you don’t ever look at where that path ultimately is headed and at the full costs that the choice entails. Justification for infidelity and dishonesty in all their manifestations lies in the marginal cost economics of “just this once.”

The lesson I learned from this is that it’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time. If you give in to “just this once,” based on a marginal cost analysis, as some of my former classmates have done, you’ll regret where you end up. You’ve got to define for yourself what you stand for and draw the line in a safe place.”

Another way is to start with the worst-case and work back. Taking Jeffrey Epstein as an example, work from the worst outcome to the best and determine where on the spectrum you would find it acceptable, knowing everything you know now. I would hope everyone would say that they would not like any association with him at any level. If that is the case, then we need to be like that with all our relationships and ask how they reflect on our Core Values.

Talking about someone that I find to be abhorrent, one of their supporters said, “But his friends say he is wonderful, kind, and charming.” My response, “So did Heinrich Himmler’s, so I don’t find that a valid qualifier.”

An exercise that I do with my Vistage Groups, and I know many others do, is ask people to write their obituary as they would like to see it. Once you have done that, look at your actions and relationship today and ask, “Are there relationships and actions ones that I would be proud of when my obituary is written.” It is all too easy to justify ignorance to ourselves. However, imagine being questioned in a courtroom with your family and best friends in the spectators’ section, and you are asked how you never saw all the bad behaviors as they are laid out in front of you. While you may justify it, will your friends and family look at you in the same way again? I would hate for any of you to be a Lt. Col. Matthew Andrew Markinson.

Be brave and live your Core Values, whatever they may be, because character matters at the end of the day.

 

Copyright (c) 2021, Marc A Borrelli

Character Matters

Character Matters

“It’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time.” — Clayton Christiansen. I have often written about the importance of a company’s Core Values. That’s because no matter what words you may have chosen as values, your organization’s Core Values are on display in how leadership and employees actually behave. As I’ve said before, how you have acted in the last twelve months will define your career for the next decade. Your character, and your company’s character, matters.

New Year’s Resolutions, Once More Unto the Breach

New Year’s Resolutions, Once More Unto the Breach

The holidays have been even quieter than normal, which has given me plenty of time to reflect on my New Year’s resolutions. Looking at 2021, I decided to use a completely new approach to lay out my goals.  The result of my new approach? A highly-detailed, accountable, actually achievable plan for the next year (I think). Wondering what this process looks like?

To Vaccinate or Not to Vaccinate, that is the Question

To Vaccinate or Not to Vaccinate, that is the Question

What do your employees, peers, and leadership team think of the COVID-19 vaccine? Will you require the vaccine, or will you let employees make individual decisions? As a leader, you need to steer the discussion about vaccines in your organization with your Core Values in mind. No matter what strategy your organization takes, the most important factor is going to be how you communicate your decision.

3 Ways You Could be Undermining Your Core Values

3 Ways You Could be Undermining Your Core Values

Can you answer “Why does your organization exist? What are your core values?” Great. Now, would your latest entry-level employee give a similar answer? How about someone who has been at your company for a year? Your core values give your organization a guiding mission. Many organizations pay this idea lip service, but their true commitment to their core values was tested this year. As we close out 2020, there’s no better time to examine how your organization is approaching your core values.

Are You Prepared for 2021 With Enough Cash?

Are You Prepared for 2021 With Enough Cash?

Companies don’t go bankrupt because they lose money; rather, they run out of cash. Where are we, heading into 2021? First, you can expect your cash to get tighter as we weather the current economic slowdown. Then, with a vaccine on the horizon, you will need to be positioned for growth. If you don’t have the cash you need, have you looked at how you can generate the cash internally? More on how to improve your cash conversion cycle…

Tony Hsieh, a Corporate Culture Icon, RIP

Tony Hsieh, a Corporate Culture Icon, RIP

In his work as Zappos CEO and elsewhere, Tony Hsieh believed, and proved, that culture is the most important thing in an organization. According to Hsieh, if you get the culture right, the rest will take of itself. How did Zappos do it? You can take a look at everything from the company’s interview questions, to “The Offer” to leave a position as a new hire. Hsieh believed that a company’s brand is just a reflection of the culture, and his legacy is felt across so many industries.

CEO, Try Thy Hiring System

CEO, Try Thy Hiring System

How does your company hire? I’ve seen the good, the bad, and the surprisingly ugly hiring processes in my career. From the HR email mix-ups to the interviewer watching the World Series while I responded to his questions, I’ve learned that you can tell a lot about an organization simply by examining the hiring experience. Are you chasing away the kind of people you need at your company?

What is Leadership?

What is Leadership?

What is it, exactly, that great leaders do? There are plenty of overused adages about “leadership” in business. It’s worth examining the tropes around leadership, plus the traits of the leaders who actually leave a mark. Great leaders are forged through adversity, and they leave a legacy. What does that look like in your organization?

Yes, We Are a Country (Team) Divided

Yes, We Are a Country (Team) Divided

The most clear-cut result of this election has been that we are divided as a country. I’m not going to discuss the why’s of either side. However, it’s urgent to talk about how to lead an organization full of people whose worldviews look completely different. As a leader, you have to get all these people to pull together, support each other, and achieve more as a team than they can individually. There are two fundamental ways to lead: Divide people, or Unite people.

Oh Boy, Does the U.S. Need Infrastructure!

Oh Boy, Does the U.S. Need Infrastructure!

When I first arrived in the United States, I couldn’t stop staring: why have Americans hung electrical wires from poles along the road, instead of burying them underground like other countries? The history of our infrastructure is actually fascinating. Everything from American waterways to why the U.S. is falling behind with electric cars can be traced back to infrastructure. Investments in infrastructure ripple across the economy, domestically and globally.

New Year’s Resolutions, Once More Unto the Breach

New Year’s Resolutions, Once More Unto the Breach

Well, another New Year has come, and once more time for New Year’s Resolutions. Looking at my resolutions for 2020, as I plan for 2021, I was pretty pleased with myself. The goals I missed out on were volunteering and being more social, both of which were hard in a COVID world. However, as I contemplated my resolutions for 2021, a conversation came to mind.

Five years ago, at a friend’s 50th birthday party, one of the other participants said, “I have 20 summers left, and I am not wasting another one.” We all looked in shock at him and asked if he was ill. “No,” was his response. “I am 50, and I believe that until I am 70, I can do pretty much anything I want, but after that, who knows. So, I have twenty summers left, and that is not a lot, so I don’t wish to waste them.” While that conversation resonated with me at the time, COVID-19, the death of a friend, and close two friends having severe illnesses at the end of this year, just brought home that I am heading towards the next chapter in my life, and I need to plan for it. Thus, I took a different approach to my resolutions this year and applied standard business planning processes.

So, what have I done? Well, I started by determining who the best me is. With that in mind, I returned to Jack Cranfield’s ideas and developed a list of affirmations that I wish to live with that will make me the best me. With my affirmations in place, I then created a set of core values that I want to apply to my personal and business life. There are rules that I am going to process my decision making through.

 

The BHAG

I have developed a BHAG with my best self in mind with that framework. While my personal BHAG is longer than a traditional business one, it needs to include my business, personal, and relationship desires. As a result, it is “Is to have successfully retired in Costa Brava in Spain and Atlanta, with sufficient investments to allow me to continue my lifestyle while ensuring that my children are established in their desired careers.”

So, with that BHAG, let’s clarify it in more detail. I expect to retire somewhere between 2032 and 2037 (70 to 75), so by that time, I need to have:

  • Purchased a house on the Costa Brava;
  • Invested enough to meet our lifestyle needs living in two places;
  • Invested sufficient to pay for regular travel;
  • Become conversationally proficient in Spanish;
  • Developed outside interests to keep me occupied in retirement;
  • Maintained a level of weight, strength, and fitness to be able to enjoy my retirement; and
  • I have helped my children complete college and graduate school and get into their chosen professions.

Digging into this BHAG, it has business, personal, and relationship requirements.

The Business requirement is earning over $200k+ net income per year from now until retirement to purchase a home in Spain, resulting in sufficient invested assets to maintain our lifestyle. To achieve this, my business goal is to be a leading business coach in the Atlanta area for companies looking to “Scale without Fail” with revenues between $10MM and $200MM.

The Personal requirement has several components.

  • To be proficient in Spanish will require studying and practicing Spanish for the next 10+ years and probably need one or two immersion programs.
  • To maintain my weight, strength, and fitness will require losing an additional 10lbs and doing a little more strength and fitness training weekly as I would like to at least a hike/walk of 7+ days once a year and snow ski a week a year.
  • To develop interests to keep me occupied in retirement is to keep reading 30 books a year and look at the possibility of doing an online MA degree during retirement to keep my mind active.

The Relationship requirement also has several components.

  • Successful retirement will require a robust, loving, happy, and supportive relationship with my wife.
  • To have ensured that my children have finished college and graduate school and are established in their professions requires support, engagement, and love.
  • To have better relationships with old friends who are spread worldwide.

 

The 3-HAG

Having developed my BHAG, I then turned that into a 3 Year Highly Achievable Goals (3HAG) list, which is set out below.

Business

  • Generate $250k+ a year in revenue
  • Have at least 20 clients between Vistage and external coaching client

Personal

  • Be proficient enough to have a conversation in Spanish for 30 minutes with a stranger.
  • Weigh what I weighed when I graduated high school (-10lbs)
  • Fit enough to do an 11-day hike and ski five days
  • Read at least 40 books comprising, the Classics, Science, History, Biographies, and five non-fiction books.

Relationships

  • Take an annual two-week vacation with my wife, disconnecting from electronics and the outside world, and focusing on each other.
  • To talk to my children weekly about their lives and careers, spending time listening and supporting but not solving their problems. Helping them when I can and spending at least a week a year vacationing together.
  • Having spoken to my “old” friends at least once a month on the phone.

 

SMART Goals or Resolutions

I used my 3-HAG to define my goals or resolutions for 2021 and applied the SMART technique to determine them. They must be:

Specific. The goals should be clear and unambiguous, so you can focus your efforts or feel truly motivated to achieve them. By building these goals to support my BHAG and 3-HAG, I believe I have answered most of the five “W” questions:

  • What do I want to accomplish?
  • Why is this goal important?
  • Who is involved?
  • Where is it located?
  • Which resources or limits are required?

Measurable. Tying my goals to the BHAG and 3HAG, it was easy to define the measurement requirements. So once again, I have already addressed the questions for measurable goals, e.g.:

  • How much?
  • How many?
  • How will I know when it is accomplished?

Achievable. To realize my 3-HAG, the goals must also be realistic and attainable while stretching my abilities. I believe my resolutions have addressed these questions.

  • How can I accomplish this goal?
  • How realistic is the goal, based on other constraints, such as financial factors?

Relevant – Once more tying the goals to one’s BHAG and 3-HAG, I have ensured that the goals matter and align with my pertinent other goals. So I believe I can say “yes” to these questions:

  • Does this seem worthwhile?
  • Is this the right time?
  • Does this match my other efforts/needs?
  • Is it applicable in the current socio-economic environment?

Time-bound – All the goals have a target date to have a deadline to focus on and something to work toward, and answer these questions:

  • When?
  • What can I do three/six/nine months from now?
  • What can I do one/two/three/four/ weeks from now?
  • What can I do today?

Here are my goals for 2021.

Business

  • Have five coaching Clients on annual contracts
  • Have 14 Vistage Clients
  • Start every day with affirmations and planning the day’s events around the 5 x 5 framework
  • Migrate all non-value work to outside services, e.g., accounting, calendar control
  • Stick to marketing plan for:
    • Social Media
    • Blog Posts
    • Newsletters
    • Webinars

Personal

  • Walk five miles four times a week
  • Do yoga three times a week
  • Stick to new diet of limited dairy, carbs, and sugar
  • Work on Spanish 30 minutes a day and start having online conversations in Q2 once a week
  • Read/listen for an hour every day for books on my booklist

Relationships

  • Take a two-week vacation with my wife during 2021
  • Take a long weekend vacation once a quarter
  • Speak to my children once a week to support them and not solve their issues
  • Develop a calling plan for “old” friends, so they are all called through the month
  • Ensure that when I am with my wife, children, or friends, I am truly present. I have put electronics away, emptied my mind of the usual distractions, and focused on them

Of course, I have taken these and turned them into quarterly, monthly, and weekly plans, which I won’t bore you with, but they are all laid out to be tracked carefully. Also, I have already taken many steps to ensure that I get them done, starting as I want to finish. Finally, I have shared them with my family, friends, and all of you, so I have many people out there to help me and hold me accountable for getting them all done.

As a result, I have prepared a very different list of resolutions this year, but I hope that they will enable me to be the best me in the next ten years and live the life I want. Next year I will let you know if this process led to better goal achievement. However, I suggest that you try something like this with your resolutions.

Here is wishing you all a successful and happy 2021.

 

Copyright (c) Marc A. Borrelli 2021

Character Matters

Character Matters

“It’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time.” — Clayton Christiansen. I have often written about the importance of a company’s Core Values. That’s because no matter what words you may have chosen as values, your organization’s Core Values are on display in how leadership and employees actually behave. As I’ve said before, how you have acted in the last twelve months will define your career for the next decade. Your character, and your company’s character, matters.

New Year’s Resolutions, Once More Unto the Breach

New Year’s Resolutions, Once More Unto the Breach

The holidays have been even quieter than normal, which has given me plenty of time to reflect on my New Year’s resolutions. Looking at 2021, I decided to use a completely new approach to lay out my goals.  The result of my new approach? A highly-detailed, accountable, actually achievable plan for the next year (I think). Wondering what this process looks like?

To Vaccinate or Not to Vaccinate, that is the Question

To Vaccinate or Not to Vaccinate, that is the Question

What do your employees, peers, and leadership team think of the COVID-19 vaccine? Will you require the vaccine, or will you let employees make individual decisions? As a leader, you need to steer the discussion about vaccines in your organization with your Core Values in mind. No matter what strategy your organization takes, the most important factor is going to be how you communicate your decision.

3 Ways You Could be Undermining Your Core Values

3 Ways You Could be Undermining Your Core Values

Can you answer “Why does your organization exist? What are your core values?” Great. Now, would your latest entry-level employee give a similar answer? How about someone who has been at your company for a year? Your core values give your organization a guiding mission. Many organizations pay this idea lip service, but their true commitment to their core values was tested this year. As we close out 2020, there’s no better time to examine how your organization is approaching your core values.

Are You Prepared for 2021 With Enough Cash?

Are You Prepared for 2021 With Enough Cash?

Companies don’t go bankrupt because they lose money; rather, they run out of cash. Where are we, heading into 2021? First, you can expect your cash to get tighter as we weather the current economic slowdown. Then, with a vaccine on the horizon, you will need to be positioned for growth. If you don’t have the cash you need, have you looked at how you can generate the cash internally? More on how to improve your cash conversion cycle…

Tony Hsieh, a Corporate Culture Icon, RIP

Tony Hsieh, a Corporate Culture Icon, RIP

In his work as Zappos CEO and elsewhere, Tony Hsieh believed, and proved, that culture is the most important thing in an organization. According to Hsieh, if you get the culture right, the rest will take of itself. How did Zappos do it? You can take a look at everything from the company’s interview questions, to “The Offer” to leave a position as a new hire. Hsieh believed that a company’s brand is just a reflection of the culture, and his legacy is felt across so many industries.

CEO, Try Thy Hiring System

CEO, Try Thy Hiring System

How does your company hire? I’ve seen the good, the bad, and the surprisingly ugly hiring processes in my career. From the HR email mix-ups to the interviewer watching the World Series while I responded to his questions, I’ve learned that you can tell a lot about an organization simply by examining the hiring experience. Are you chasing away the kind of people you need at your company?

What is Leadership?

What is Leadership?

What is it, exactly, that great leaders do? There are plenty of overused adages about “leadership” in business. It’s worth examining the tropes around leadership, plus the traits of the leaders who actually leave a mark. Great leaders are forged through adversity, and they leave a legacy. What does that look like in your organization?

Yes, We Are a Country (Team) Divided

Yes, We Are a Country (Team) Divided

The most clear-cut result of this election has been that we are divided as a country. I’m not going to discuss the why’s of either side. However, it’s urgent to talk about how to lead an organization full of people whose worldviews look completely different. As a leader, you have to get all these people to pull together, support each other, and achieve more as a team than they can individually. There are two fundamental ways to lead: Divide people, or Unite people.

Oh Boy, Does the U.S. Need Infrastructure!

Oh Boy, Does the U.S. Need Infrastructure!

When I first arrived in the United States, I couldn’t stop staring: why have Americans hung electrical wires from poles along the road, instead of burying them underground like other countries? The history of our infrastructure is actually fascinating. Everything from American waterways to why the U.S. is falling behind with electric cars can be traced back to infrastructure. Investments in infrastructure ripple across the economy, domestically and globally.

To Vaccinate or Not to Vaccinate, that is the Question

To Vaccinate or Not to Vaccinate, that is the Question

In my Vistage meetings this week, we had an interesting discussion on whether or not my members would make their employees get a COVID vaccine. While there was a brief discussion on whether or not you could legally make your employees get vaccinated, we primarily discussed what each person would do. (Apparently, you can with two exceptions, medical conditions make it dangerous and religious objections. For more see, Can I Be Required To Get Vaccinated Against Covid-19?). The results were diverse and ranged from:

  • “No!” “I would take it myself but would not force my employees to do so because they may leave.”
  • “I have many conspiracy theorists among a section of my workforce, and they will object.”
  • “No, I don’t want to be sued.”
  • “If they want to travel, they have to.”
  • “If they want to work in the office, they have to as we have health comprised people in the office.”

However, what stood out in the discussion was that none of the CEOs framed their response within their Core Values. Again, as Jim Collins says, Core Values are so important that we would be willing to lose profit rather than breach them. Thus, if our Core Values are that important, indeed, they should frame our response to the vaccination question. If we don’t, then once more, our Core Values are only words on a wall or a pad but have no impact on the organization and behavior in it. In that case, they are worthless, and your employees lose trust in your words and statements because they are just that – words, and not beliefs.

Regardless of whether your Core Values are just words on a wall or actively known by every employee, a complex issue like vaccination stresses them and how they are understood within the organization. Those of you who read my blogs know that I have said that Core Values provide employees a framework for making decisions within an organization. However, if your Core Value is “Respect,” what does that mean, especially in the COVID vaccine world? Does it mean:

  • Out of RESPECT for our fellow workers, we will all vaccinate.
  • Out of RESPECT for you, your opinion, and your decision making, we will allow you to do what you think is best.
  • Out of RESPECT for you, we will enable you to determine what you put in your body.
  • Out of RESPECT for our clients, we will vaccinate those that are client-facing.
  • Out of RESPECT for our employees’ health and decision making, we will allow those that don’t want to be vaccinated to work from home so they can’t infect anyone in the office.
  • Out of RESPECT for our fellow citizens, we will all vaccinate to get to herd immunity quicker.
  • Out of RESPECT for your health-compromised family, we will allow you to work from home until it is safe to return to the office, whether that be one month or five years.

As you can see, a single word like RESPECT can have many different interpretations, and this is where things get complicated. For example, if you determine that your version of RESPECT is the second one, “Out of RESPECT for you, your opinion, and your decision making, we will allow you to do what you think is best.” You apply that to COVID, then surely it applies to all decisions they make within the organization. While we all like to push decision-making down, the leadership team has to be able to override decisions and impose its desires in certain instances. So what are those situations, and where is the line?

Core Values are more than just words or statements. They have meaning, and the organization can only succeed if the intention is understood equally by everyone in the organization. To see how you are doing, ask your employees if they know what the organization’s Core Values are, and how they should be understood. Your employees may often find it hard to define them, so offer them situations and ask, “what should someone in the organization do?”

Here you might find a great deal of diversity of opinion. To overcome this and teach your Core Values, I think the best way is to rely on corporate folklore. Your company needs stories of the founder, the CEOs, the great people in its history, and how they behaved in situations that reflect the company’s Core Values. Having corporate folklore and ensuring that employees learn the stories and their meaning as part of the onboarding process will create greater belief in, and understanding of, your Core Values. Furthermore, make sure to repeat the folklore stories whenever a situation arises where they are relevant. Repeating them drives home learning until everyone knows your Core Values and how they should be interpreted.

Returning to the COVID vaccinations decision. Well, regardless of your Core Values, the decision of whether or not to require employees to be vaccinated will be hard. However, I would recommend that, first of all, you be a leader in your decision and state it with leadership in mind. If you want them vaccinated, be at the front of the line. Second, figure out how your decision fits with your Core Values and explain that way. Of course, it has to work; if it is a stretch or plain contradictory, then maybe you need to re-examine your Core Values.

Good luck, and may you stay safe in the meantime.

 

Copyright (c) 2020, Marc A. Borrelli

Character Matters

Character Matters

“It’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time.” — Clayton Christiansen. I have often written about the importance of a company’s Core Values. That’s because no matter what words you may have chosen as values, your organization’s Core Values are on display in how leadership and employees actually behave. As I’ve said before, how you have acted in the last twelve months will define your career for the next decade. Your character, and your company’s character, matters.

New Year’s Resolutions, Once More Unto the Breach

New Year’s Resolutions, Once More Unto the Breach

The holidays have been even quieter than normal, which has given me plenty of time to reflect on my New Year’s resolutions. Looking at 2021, I decided to use a completely new approach to lay out my goals.  The result of my new approach? A highly-detailed, accountable, actually achievable plan for the next year (I think). Wondering what this process looks like?

To Vaccinate or Not to Vaccinate, that is the Question

To Vaccinate or Not to Vaccinate, that is the Question

What do your employees, peers, and leadership team think of the COVID-19 vaccine? Will you require the vaccine, or will you let employees make individual decisions? As a leader, you need to steer the discussion about vaccines in your organization with your Core Values in mind. No matter what strategy your organization takes, the most important factor is going to be how you communicate your decision.

3 Ways You Could be Undermining Your Core Values

3 Ways You Could be Undermining Your Core Values

Can you answer “Why does your organization exist? What are your core values?” Great. Now, would your latest entry-level employee give a similar answer? How about someone who has been at your company for a year? Your core values give your organization a guiding mission. Many organizations pay this idea lip service, but their true commitment to their core values was tested this year. As we close out 2020, there’s no better time to examine how your organization is approaching your core values.

Are You Prepared for 2021 With Enough Cash?

Are You Prepared for 2021 With Enough Cash?

Companies don’t go bankrupt because they lose money; rather, they run out of cash. Where are we, heading into 2021? First, you can expect your cash to get tighter as we weather the current economic slowdown. Then, with a vaccine on the horizon, you will need to be positioned for growth. If you don’t have the cash you need, have you looked at how you can generate the cash internally? More on how to improve your cash conversion cycle…

Tony Hsieh, a Corporate Culture Icon, RIP

Tony Hsieh, a Corporate Culture Icon, RIP

In his work as Zappos CEO and elsewhere, Tony Hsieh believed, and proved, that culture is the most important thing in an organization. According to Hsieh, if you get the culture right, the rest will take of itself. How did Zappos do it? You can take a look at everything from the company’s interview questions, to “The Offer” to leave a position as a new hire. Hsieh believed that a company’s brand is just a reflection of the culture, and his legacy is felt across so many industries.

CEO, Try Thy Hiring System

CEO, Try Thy Hiring System

How does your company hire? I’ve seen the good, the bad, and the surprisingly ugly hiring processes in my career. From the HR email mix-ups to the interviewer watching the World Series while I responded to his questions, I’ve learned that you can tell a lot about an organization simply by examining the hiring experience. Are you chasing away the kind of people you need at your company?

What is Leadership?

What is Leadership?

What is it, exactly, that great leaders do? There are plenty of overused adages about “leadership” in business. It’s worth examining the tropes around leadership, plus the traits of the leaders who actually leave a mark. Great leaders are forged through adversity, and they leave a legacy. What does that look like in your organization?

Yes, We Are a Country (Team) Divided

Yes, We Are a Country (Team) Divided

The most clear-cut result of this election has been that we are divided as a country. I’m not going to discuss the why’s of either side. However, it’s urgent to talk about how to lead an organization full of people whose worldviews look completely different. As a leader, you have to get all these people to pull together, support each other, and achieve more as a team than they can individually. There are two fundamental ways to lead: Divide people, or Unite people.

Oh Boy, Does the U.S. Need Infrastructure!

Oh Boy, Does the U.S. Need Infrastructure!

When I first arrived in the United States, I couldn’t stop staring: why have Americans hung electrical wires from poles along the road, instead of burying them underground like other countries? The history of our infrastructure is actually fascinating. Everything from American waterways to why the U.S. is falling behind with electric cars can be traced back to infrastructure. Investments in infrastructure ripple across the economy, domestically and globally.

3 Ways You Could be Undermining Your Core Values

3 Ways You Could be Undermining Your Core Values

As we have all struggled through 2020 and the difficulties of lockdowns and WFH, our core values are guiding decision making and holding us together as organizations. Talking to a senior executive recently, he said that COVID had destroyed his organization’s comradery, and no one felt connected. However, on further investigation, it appeared that the company has no core values, as they thought them irrelevant.

I find companies without clearly articulated core values can rarely define, “Why do you exist?” If you have no core values, no guiding mission, and everyone is now working from home, what bonds the team together? The only thing is the paycheck. However, we know that money is a terrible motivator. Scholars at the London School of Economics looked at 51 studies on pay-for-performance schemes and concluded:

“We find that financial incentives may indeed reduce intrinsic motivation and diminish ethical or other reasons for complying with workplace social norms such as fairness. As a consequence, the provision of incentives can result in a negative impact on overall performance.”

So, core values are fundamental. I hope you have some, and they are clearly articulated in your organization. Remember, as Jim Collins says, core values are those things we would rather lose profit over than breach. If you are undermining them, your team loses commitment to the values, and it becomes a Lord of the Flies environment with finger-pointing, denouncements, and everyone for themselves.

However, even if you do have core values, there may be three ways you are undermining them.

You Breach Them

The first possibility: you breach your core values! If one of your core values is, “We treat everyone with respect” (which I often see in companies) and you do something disrespectful to an employee, customer, or just someone outside the organization, it causes issues. The perception among your employees is that:

  • The CEO lacks personal commitment to the core values;
  • The CEO is a hypocrite; and
  • All corporate statements around behavior, mission, and values are only words and not taken seriously.

Therefore, you and your leadership team must live your core values at all times. If one of you cannot, then either they have to leave the organization, or you have to change your core values. Pat Lencioni talks of a company where once they had defined their core values, one of the leadership team resigned, saying, “I cannot live that value, and if that is the value of the organization, then I should go.” It can be hard to enforce them, but it is better for the organization in the long term.

You Allow Others to Breach Them

As mentioned above, the CEO and leadership team must live the company’s core values. However, if you allow others within the organization to breach them, it leads to the issues described above. I have often seen that the leadership team provides a pass for some employees because they are high performers, e.g., top salesperson or IT person. The rationale is that we cannot survive without them, and so we will tolerate their failing to behave because it is more important to keep them than maintain our core values. However, as Jim Collins points out, you should be prepared to take a loss to live up to them, so you should be prepared to lose these employees to keep your core values.

I often have CEOs and leadership teams struggle with what to do about such “toxic” people, and at the end of the day, after much pushing, they let that individual go. What usually happens is that company morale improves, core values become believed in, and productivity increase above the levels that were there when the toxic person roamed the organization.

Your Employees Are Confused as To What They Mean

Of the three reasons, this is probably the most common, because it is the easiest to do. I have said the worst two inventions for the corporate world were Excel and PowerPoint. The former encourages accuracy without precision, and the latter because we have lots of presentations where everyone has their interpretation of what the meaning was. This lack of definition is pervasive with core value statements.

You need to explain the meaning of core values. Reinforce them by recognizing examples of the team’s correct behavior, and explaining why specific actions are not core values even if they appear to fall within the definition. If you don’t, employees will weave their interpretations and ideologies into them. The employees’ ideologies and interpretations may take the core values further or in a different direction than the CEO intended. However, once the employees have taken them there, the CEO and leadership team’s opportunity to breach them increases dramatically.

If a core value is “employee growth and belonging,” without being clear as to what this means, it may be interpreted as:

  • Employee empowerment to do more than they should.
  • A family environment where the growth is limited to ensure that family feeling
  • Communication is equal, and everyone has a voice at all levels.

If that is not what the CEO intends, but it is what the employees now believe, it becomes only a matter of time before the CEO crosses the line and breaches the core values in the employees’ minds.

The problem that most often happens is that the employees don’t consider if their interpretation of the core values was wrong; instead, they assume that the CEO is a hypocrite and doesn’t care about the core values. Employees are unlikely to raise the issue that they think the CEO and leadership team have breached the company’s core values because the values of “Open Door” and “Bring me the bad news” are now just considered words rather than values. Thus, the negative spiral starts.

To prevent this, leaders must spend time asking employees what they are thinking and feeling, as well as sharing their own thoughts so that the employees will feel comfortable expressing their concerns.

To ensure that the understanding is correct, the leadership team needs to reinforce examples of behavior that supports their definition of the core values. When they see actions that don’t mean the intent, call them out and explain why it doesn’t fit the core values. Also, recognizing individuals’ living core values within the organization reinforces the organization’s commitment to the core values. Finally, the CEO and leadership team need to be aware of when they breach the values, admit their failures, and commit to living to those standards in the future.

I hope as we end the year, you CEOs and business leaders will take time to recognize those in your organization that has lived your corporate values during the struggles of 2020 in your one-on-one meetings. It will provide a great deal of goodwill and encourage the behavior far more than the usual “Rally around the flag” speech at the end of the year.

 

Copyright (c) 2020 Marc A Borrelli

 

Character Matters

Character Matters

“It’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time.” — Clayton Christiansen. I have often written about the importance of a company’s Core Values. That’s because no matter what words you may have chosen as values, your organization’s Core Values are on display in how leadership and employees actually behave. As I’ve said before, how you have acted in the last twelve months will define your career for the next decade. Your character, and your company’s character, matters.

New Year’s Resolutions, Once More Unto the Breach

New Year’s Resolutions, Once More Unto the Breach

The holidays have been even quieter than normal, which has given me plenty of time to reflect on my New Year’s resolutions. Looking at 2021, I decided to use a completely new approach to lay out my goals.  The result of my new approach? A highly-detailed, accountable, actually achievable plan for the next year (I think). Wondering what this process looks like?

To Vaccinate or Not to Vaccinate, that is the Question

To Vaccinate or Not to Vaccinate, that is the Question

What do your employees, peers, and leadership team think of the COVID-19 vaccine? Will you require the vaccine, or will you let employees make individual decisions? As a leader, you need to steer the discussion about vaccines in your organization with your Core Values in mind. No matter what strategy your organization takes, the most important factor is going to be how you communicate your decision.

3 Ways You Could be Undermining Your Core Values

3 Ways You Could be Undermining Your Core Values

Can you answer “Why does your organization exist? What are your core values?” Great. Now, would your latest entry-level employee give a similar answer? How about someone who has been at your company for a year? Your core values give your organization a guiding mission. Many organizations pay this idea lip service, but their true commitment to their core values was tested this year. As we close out 2020, there’s no better time to examine how your organization is approaching your core values.

Are You Prepared for 2021 With Enough Cash?

Are You Prepared for 2021 With Enough Cash?

Companies don’t go bankrupt because they lose money; rather, they run out of cash. Where are we, heading into 2021? First, you can expect your cash to get tighter as we weather the current economic slowdown. Then, with a vaccine on the horizon, you will need to be positioned for growth. If you don’t have the cash you need, have you looked at how you can generate the cash internally? More on how to improve your cash conversion cycle…

Tony Hsieh, a Corporate Culture Icon, RIP

Tony Hsieh, a Corporate Culture Icon, RIP

In his work as Zappos CEO and elsewhere, Tony Hsieh believed, and proved, that culture is the most important thing in an organization. According to Hsieh, if you get the culture right, the rest will take of itself. How did Zappos do it? You can take a look at everything from the company’s interview questions, to “The Offer” to leave a position as a new hire. Hsieh believed that a company’s brand is just a reflection of the culture, and his legacy is felt across so many industries.

CEO, Try Thy Hiring System

CEO, Try Thy Hiring System

How does your company hire? I’ve seen the good, the bad, and the surprisingly ugly hiring processes in my career. From the HR email mix-ups to the interviewer watching the World Series while I responded to his questions, I’ve learned that you can tell a lot about an organization simply by examining the hiring experience. Are you chasing away the kind of people you need at your company?

What is Leadership?

What is Leadership?

What is it, exactly, that great leaders do? There are plenty of overused adages about “leadership” in business. It’s worth examining the tropes around leadership, plus the traits of the leaders who actually leave a mark. Great leaders are forged through adversity, and they leave a legacy. What does that look like in your organization?

Yes, We Are a Country (Team) Divided

Yes, We Are a Country (Team) Divided

The most clear-cut result of this election has been that we are divided as a country. I’m not going to discuss the why’s of either side. However, it’s urgent to talk about how to lead an organization full of people whose worldviews look completely different. As a leader, you have to get all these people to pull together, support each other, and achieve more as a team than they can individually. There are two fundamental ways to lead: Divide people, or Unite people.

Oh Boy, Does the U.S. Need Infrastructure!

Oh Boy, Does the U.S. Need Infrastructure!

When I first arrived in the United States, I couldn’t stop staring: why have Americans hung electrical wires from poles along the road, instead of burying them underground like other countries? The history of our infrastructure is actually fascinating. Everything from American waterways to why the U.S. is falling behind with electric cars can be traced back to infrastructure. Investments in infrastructure ripple across the economy, domestically and globally.

Are You Prepared for 2021 With Enough Cash?

Are You Prepared for 2021 With Enough Cash?

Well, 2020 is just about done, and as we move in 2021, are you and your business prepared? Regardless of how COVID has impacted you, the economy is slowing, so you can expect cash to get tighter as suppliers expect payment sooner and customers pay later.

With a vaccine on the horizon, companies need to be prepared to take advantage of the improving economy when we get there by weathering the current slowdown and positioning themselves for growth. As we look at the potential growth ahead with an improving economy, do you have enough cash to:

  1. To get through the winter.
  2. Invest in new technologies and systems to stay relevant or take market leadership.
  3. Hire the talent you need to take market leadership or get back to where you were before COVID.
  4. Invest in product/service development to take advantage of changes in the market due to COVID.

If your answer to 1 is negative, you are in trouble. Companies don’t go bankrupt because they lose money; rather, they run out of cash. Cash is like oxygen: if we run out of it, we die. If your answer to 1 is yes, what about 2 – 4? If you want to be in a strong market position in H2, you need to be investing now.

So, if you can’t answer 1 – 4 in the affirmative, what are you going to do? Remember, YOU CANNOT CUT YOUR WAY TO GROWTH! The easiest thing is to get bank financing. If you have a bank line or your bank will lend you the money, great! However, if not, things are a little more difficult. Please don’t take advantage of those letters, flyers you all receive offering quick financing. The interest rates are usurious and over 40% in many cases. There are other lending alternatives, and contact me if you need to discuss some.

However, what about self-funding? Have you looked at how you can generate the cash internally?

 

Cash Conversion Cycle

There are four basic cash conversion cycles in a company:

  • Sales Cycle
  • Production & Inventory Cycle
  • Delivery Cycle
  • Billings and Payment Cycle

Concerning your organization, do you know the length of your cycle for each of these? If you add them all together, you can define the full Cash Conversion Cycle for your company. Once you have done that, you have three questions:

  1. What is your Cash Conversion Cycle?
  2. Are you happy with it?
  3. Can you improve it?
  4. Where should you focus your efforts?

Regardless of which cycle you examine, there are basically three ways to improve it:

 

Eliminate mistakes

There are all sorts of mistakes that affect these cycles, from the obvious ones of production mistakes to rework, mistakes in estimates, contracts, invoices, and wrong delivery. We make them all. But do you know which ones are affecting your business the most? You need to honestly examine your business to identify where the mistakes are made and which are the largest. Focus on the biggest first as they will be the easiest to get the largest benefit from, e.g. if your inventory time is 120 days, but your billing and payments time is 30 days, it will be easier to cut five days off production than billing and payments.

 

Shorten the cycle time

Look at all the times and see where you can shorten them. While COVID has beaten up the “Just in Time” production process, you can still work at reducing production time and inventory time. What can you do on the sales cycle, the billings and payments cycle? Right now, everyone is at home dealing with COVID, so maybe it is a good time to work through these processes to see where efficiencies can be made. Consider working through Tom Wujec’s method of improving processes. It is a great way to see how improvements in your cycle time can be made.

Improve your business model

Changing the business model is an interesting one. Can you change how you do business so that you can dramatically alter your cash conversion cycle? Dell did and took its cash conversion cycle from 63 days to -39 days. Yes, that is -39 days. How? If you bought a computer from Dell, they are made to order, so you have paid for it before they start manufacturing. Thus, they have $0 receivables; they pay their suppliers probably 60 days and their employees 14 days. Since they are paid upfront, there is no delivery cycle, so the only other area is the sales cycle.

I once worked with a company that was facing bankruptcy and had to reorganize itself to survive. They looked at the Dell model and decided they need to copy it. They changed their business model and became the only company in their industry to have $0 accounts receivable. Using “Just in Time” production, they were paying their suppliers after they got paid. They did a great deal of market research and determined within a six-month period when their customers would purchase. Thus, they focused sales efforts on customers within that window, primarily reducing the sales cycle.

The hard part is changing the model because it is not an incremental improvement but a new model. Look at Costco, the first big-box retailer to introduce membership fees, providing a large part of its profit at the beginning of a relationship with the customer.

So, what can you do? Examine it; you will find it is well worth the effort.

Once you have examined your Cash Conversion Cycle, the next thing is to look at your business through the Power of One.

 

Power of One (1%)

Alan Miltz developed the Power of One and basically looks at the following financial variables and asks, “How would your cash flow improve if you increased any one of them by 1%?”

  • Price
  • Volume
  • Cost of Goods Sold
  • Accounts Receivable
  • Accounts Payable
  • Inventory
  • Overhead Expense

If you undertake this analysis, you will quickly see which of these variables most influence your cash flow. Starting with them from those that affect cash flow from largest to smallest, identify what percentage you would like to improve them this year and the impact on your annual cash flow and EBIT. Then work to figure out how to realize the improvement.

Working through your Cash Conversion Cycle improvements and the Power of One, it is useful to have a business coach who helps you and facilitates the meetings.

Call me to help you figure out how to improve your cash flow from now on.

 

Copyright (c) 2020, Marc A. Borrelli

Character Matters

Character Matters

“It’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time.” — Clayton Christiansen. I have often written about the importance of a company’s Core Values. That’s because no matter what words you may have chosen as values, your organization’s Core Values are on display in how leadership and employees actually behave. As I’ve said before, how you have acted in the last twelve months will define your career for the next decade. Your character, and your company’s character, matters.

New Year’s Resolutions, Once More Unto the Breach

New Year’s Resolutions, Once More Unto the Breach

The holidays have been even quieter than normal, which has given me plenty of time to reflect on my New Year’s resolutions. Looking at 2021, I decided to use a completely new approach to lay out my goals.  The result of my new approach? A highly-detailed, accountable, actually achievable plan for the next year (I think). Wondering what this process looks like?

To Vaccinate or Not to Vaccinate, that is the Question

To Vaccinate or Not to Vaccinate, that is the Question

What do your employees, peers, and leadership team think of the COVID-19 vaccine? Will you require the vaccine, or will you let employees make individual decisions? As a leader, you need to steer the discussion about vaccines in your organization with your Core Values in mind. No matter what strategy your organization takes, the most important factor is going to be how you communicate your decision.

3 Ways You Could be Undermining Your Core Values

3 Ways You Could be Undermining Your Core Values

Can you answer “Why does your organization exist? What are your core values?” Great. Now, would your latest entry-level employee give a similar answer? How about someone who has been at your company for a year? Your core values give your organization a guiding mission. Many organizations pay this idea lip service, but their true commitment to their core values was tested this year. As we close out 2020, there’s no better time to examine how your organization is approaching your core values.

Are You Prepared for 2021 With Enough Cash?

Are You Prepared for 2021 With Enough Cash?

Companies don’t go bankrupt because they lose money; rather, they run out of cash. Where are we, heading into 2021? First, you can expect your cash to get tighter as we weather the current economic slowdown. Then, with a vaccine on the horizon, you will need to be positioned for growth. If you don’t have the cash you need, have you looked at how you can generate the cash internally? More on how to improve your cash conversion cycle…

Tony Hsieh, a Corporate Culture Icon, RIP

Tony Hsieh, a Corporate Culture Icon, RIP

In his work as Zappos CEO and elsewhere, Tony Hsieh believed, and proved, that culture is the most important thing in an organization. According to Hsieh, if you get the culture right, the rest will take of itself. How did Zappos do it? You can take a look at everything from the company’s interview questions, to “The Offer” to leave a position as a new hire. Hsieh believed that a company’s brand is just a reflection of the culture, and his legacy is felt across so many industries.

CEO, Try Thy Hiring System

CEO, Try Thy Hiring System

How does your company hire? I’ve seen the good, the bad, and the surprisingly ugly hiring processes in my career. From the HR email mix-ups to the interviewer watching the World Series while I responded to his questions, I’ve learned that you can tell a lot about an organization simply by examining the hiring experience. Are you chasing away the kind of people you need at your company?

What is Leadership?

What is Leadership?

What is it, exactly, that great leaders do? There are plenty of overused adages about “leadership” in business. It’s worth examining the tropes around leadership, plus the traits of the leaders who actually leave a mark. Great leaders are forged through adversity, and they leave a legacy. What does that look like in your organization?

Yes, We Are a Country (Team) Divided

Yes, We Are a Country (Team) Divided

The most clear-cut result of this election has been that we are divided as a country. I’m not going to discuss the why’s of either side. However, it’s urgent to talk about how to lead an organization full of people whose worldviews look completely different. As a leader, you have to get all these people to pull together, support each other, and achieve more as a team than they can individually. There are two fundamental ways to lead: Divide people, or Unite people.

Oh Boy, Does the U.S. Need Infrastructure!

Oh Boy, Does the U.S. Need Infrastructure!

When I first arrived in the United States, I couldn’t stop staring: why have Americans hung electrical wires from poles along the road, instead of burying them underground like other countries? The history of our infrastructure is actually fascinating. Everything from American waterways to why the U.S. is falling behind with electric cars can be traced back to infrastructure. Investments in infrastructure ripple across the economy, domestically and globally.